Taobao Union to Open Advertising Services to All Online Advertisers

Taobao Union, the advertising service of Alibaba Group, announced to expand customer base from limited e-commerce retailers to all online advertisers at its annual event today. Also, Taobao re-adopted the brand name, Alimama, for a combination of three advertising services. Released in 2007, Alimama was originally aimed to serve all advertisers across the Web but incorporated into Taobao and renamed Taobao Union to focus on serving Taobao retailers.

Taobao Union has over five hundred thousand publisher partners and millions of online retailer customers. It features 300 million commodities, getting a total of 4.5 billion daily pageviews. Among all the publisher-based advertising networks such as Baidu Union, Alimama takes a 39.6% of market share, according to iResearch, a third-party research organization.

Social shopping sites, including Mogujie and Meilishuo, account for 21% of the total revenue shares; individual websites took a combined 31%; online video sites took 12%; the rest went to portal sites, vertical sites and third-party agencies.

Mobile Union

Taobao had already had partners on the mobile end before the official announcement of the Mobile Union. A number of mobile browsers, third-party app markets, app developers and mobile phone manufacturers became partners, according to Chong Shan, head of Taobao Mobile Union (article in Chinese).

More than fifty mobile shopping apps such as Meilishuo and Mogujie became perfect matches. They earned half the total revenue shares, about 50 million yuan ($8mn), on the mobile end in 2012. It is estimated the total transactions on Taobao’s mobile apps will reach 50 billion yuan ($8bn) in 2012, covering 150 million users.

Tanx – Taobao Ad Network Exchange

Tanx, launched in 2011, now covers 50% of the total traffic on Alimama platform. The number is expected to reach 80% in next year, according to Ding Shan, head of Tanx (source in Chinese).

In 2011, Taobao Union opened its advertising services to all third-party B2C retailers. A number of independent e-commerce players, such as Coo8, Yihaodian, Vancl, signed up to the transaction-based ad program. Alibaba Group also has Etao, a shopping search service that offers advertising options only to Taobao retailers and third-party B2C retailers, so far.

It is reported that Taobao made 8 billion yuan in revenue in 2011 through all those advertising services. That’s a number more than half of Baidu’s. That’s a big deal considering Baidu, with over 70% market share in search sector, is one of the dominant powers in online advertising market in China. It is estimated that Taobao might pass Baidu in advertising revenue this year.

After opening to all advertisers, Alimama will become a Google advertising platform less of a general search marketing service. As Taobao blocks Baidu from indexing the commodity content within its ecosystem, Etao, has potential to be the dominate search engine in e-commerce. And do you think Alibaba would like to develop a general search engine? Anything is possible.

But, when Alibaba’s advertising platform seems to become almighty — at least in e-commerce sector, some ambitious Chinese e-commerce players, say, 360Buy, wouldn’t be willing to succumb. 360Buy announced to release an advertising platform for third-party retailers on its platform early next year. It must know the in-site search marketing and display ads were the very arms for Taobao to keep making profits.